As a general rule, anyone who wants to buy a house needs a mortgage to meet the costs involved, since everyone has all that money in the bank to be able to buy it in cash, or they are directly interested in paying it in instalments so that it does not affect their savings so much. However, there are different types of mortgages and knowing them is crucial to choose the one that is best for us.
When we refer to the different types of mortgages that exist, the most common are Fixed, Variable and Mixed, but there are others that people are often unaware of.
As its name indicates, this type of mortgage is characterised by the instalment that the applicant will pay, it will always be the same until the total amount of the loan is paid, even if the interest rate or the Euribor varies.
This type offers stability and predictability for buyers, as it facilitates the financial planning of the home. However, the costs and arrangement fees are usually higher.
Referring to its name, the instalments of this mortgage will vary throughout the time we have contracted the loan. The bank carries out periodic reviews, between every six and twelve months, of the rate, and depending on how the interest rate or Euribor is at the moment, it will go down or decrease.
It is true that these mortgages can have very low repayments, but it is important to be prepared for possible monthly increases in the future. As for the management costs, they are minimal and the arrangement fee can even be non-existent.
This is a mixture of the two previous ones. For a certain period of time, agreed with the bank, the client pays a fixed instalment and, when this period ends, the instalment will become variable in reference to the interest rate or Euribor. The processing costs are usually the same as for a variable mortgage.
Other types of mortgages
As indicated above, fixed, variable and mixed mortgages are the most common on a day-to-day basis, but there are others that can benefit different types of customers. These are:
- Mortgage for young people: this type is intended for applicants under 35 years of age. They have beneficial clauses and some discounts such as the total financing of the loan or the application of lower interest rates.
- Mortgage for groups: For those who belong to certain work groups, there are specific mortgages with clauses that are adapted according to the job position, such as military personnel, aviation personnel or employees of large companies.
- Mortgage for non-residents: These are aimed at those whose country of residence is not the same as where the bank is located. For this reason, stricter criteria are applied.
- Multi-currency mortgages: these are mortgages that allow monthly payments to be made in a currency other than the country’s official currency.
- Reverse mortgage: this is a mortgage loan that allows senior citizens, from the age of 65 onwards, to obtain a monthly income until death.
In summary, when exploring the different models of mortgages, we find a variety of options that adapt to different needs and specific circumstances, so knowing about all of them will allow you to save a lot of money. At 1mast we help you with the whole process of buying your home.